Court Upholds $9.9 Million City Beach Penalty Over Button Battery Breaches

Key Takeaways

• $9.9 Million Penalty Upheld: Australia’s Full Federal Court dismissed City Beach’s appeal against the $9.9 million (AUD 14 million) penalty for breaches of mandatory button battery standards.
• More Than 54,000 Sales: City Beach sold more than 60 types of non-compliant products on more than 54,000 occasions between June 2022 and October 2024.
• Deterrence Drove the Penalty: The Full Court found that penalties involving dangerous products need not bear a close relationship to the profit earned from their sale.
• First Penalty Under the Standards: The penalty was the first imposed for breaches of Australia’s mandatory button battery standards.
• Businesses Expected to Have Compliance Systems: The ACCC said companies must implement effective systems to ensure products meet mandatory safety requirements before they are sold.

Deep Dive

For more than two years, City Beach sold toys, keyrings, digital notepads, lights and other products containing button batteries that did not meet Australia’s mandatory safety rules. There were more than 54,000 sales in all. Many of the products were meant for children. The bill for that failure remains $9.9 million (AUD 14 million).

Australia’s Full Federal Court dismissed an appeal by Fewstone, which trades as City Beach, leaving intact the penalty imposed in December 2025 in a case brought by the Australian Competition and Consumer Commission. City Beach had argued that the penalty was manifestly excessive. The court disagreed.

The case is the first to produce a penalty for breaches of Australia’s mandatory button battery standards, and the Full Court’s reasoning makes clear why the number is large. The products themselves may have been cheap. The consequences of getting their safety requirements wrong are not.

“The sale of a very dangerous but very cheap product contravening a safety standard may be a paradigm example of a circumstance where the appropriate penalty may bear no relevant relationship to the profit,” the Full Court said, pointing to the need to deter companies from selling such products or failing to put adequate systems and processes in place.

Between June 2022 and October 2024, City Beach sold more than 60 types of products containing button batteries that failed to comply with the applicable safety standards, information standards or both. The products included toys, digital notepads, keyrings, lights and light-up Jibbitz accessories for Crocs shoes. City Beach admitted that its conduct breached the Australian Consumer Law.

The dates matter. Australia’s mandatory button battery standards took effect in June 2022, the same month the period of City Beach’s admitted conduct began. Before the rules became mandatory, the ACCC had spent an 18-month transition period consulting and engaging with industry.

The standards are not concerned with an abstract or remote danger. Button batteries can become lodged in a child’s throat after being swallowed, causing serious lifelong injuries or death. Batteries inserted into the nose or ears can also cause severe injuries. Damage can occur in two hours or less. Three children have died in Australia after ingesting or inserting button batteries, according to the ACCC.

Children five and younger are at greatest risk, which gives the nature of some of the City Beach products particular significance. Toys and light-up shoe accessories are not items that merely happen to be within a child’s reach. They can be products bought for children in the first place.

Australia’s safety standard attempts to put a physical barrier between a child and the battery. Products containing button batteries must have secure battery compartments designed to resist being opened by children. The accompanying information standard requires safety warnings, including warnings about when urgent medical advice should be sought.

The original $9.9 million (AUD 14 million) penalty was imposed in December after the trial judge found that City Beach had sold the non-compliant products on more than 54,000 occasions. With Wednesday’s dismissal of the appeal, that order remains in effect.

“The Court has today confirmed that a significant penalty is appropriate in this case to deter City Beach and other traders from failing to comply with the mandatory button battery standards,” ACCC Commissioner Luke Woodward said.

Woodward also pointed to something less visible than the products themselves: the systems behind them. Businesses, he said, need processes capable of ensuring that goods comply with mandatory standards before they reach consumers.

That is where the decision reaches beyond one retailer and one category of product. The Full Court was not persuaded that the modest price of the goods should pull the penalty downward when the safety stakes pointed so strongly in the other direction. A company cannot price the seriousness of a safety failure according to what it made at the cash register.

The ACCC said it would continue taking enforcement action against businesses that fail to comply with the button battery rules. After Wednesday’s judgment, the warning comes with a useful piece of arithmetic attached: more than 54,000 sales of inexpensive products can still end in a $9.9 million penalty when the safeguards meant to protect children are missing.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.